INTERVIEW-UPDATE 1-China cuts aluminium output forecast on power

HONG KONG, July 11 (Reuters) - China will produce 6.5 percent less aluminium in 2008 than previously forecast because of power shortages, an industry body official said on Friday.

The country, the world's top aluminium producer, had been forecast to produce 15.5 million tonnes of primary aluminium this year but this had been cut to 14.5 million tonnes, Wen Xianjun, vice president of the state-controlled China Nonferrous Metals Industry Association, said.

"I have adjusted down the estimate by 1 million tonnes. If power supply tightness escalates, the output could be even lower," Wen told Reuters by telephone from Beijing.

The output forecast is still 18 percent more than in 2007, but this would represent a sharp slowdown from the 34 percent capacity increase that year.

On Thursday, China's top 20 aluminium producers said they will cut output by up to 10 percent as the country heads towards its worst power supply crisis in years, sending prices of the metal to a record high of $3,380 a tonne. [ID:nSP157888]

Wen said the cuts would be longer lasting than in late 2005, when 23 smelters reversed joint output cuts within a month as prices rose.

This year, power supplies have limited production, while smelters are also worried that the aluminium market will be oversupplied in the second half on new capacity and weaker consumption, he said. (Reporting by Polly Yam; Editing by Michael Urquhart and Ben Tan)